PT Vale's Contract of Work amendment is sealed

About Vale

10/17/2014

PT Vale's Contract of Work amendment is sealed

The Government of Indonesia and PT Vale signed an amendment to the Contract of Work The Government of Indonesia and PT Vale signed an amendment to the Contract of Work (CoW) on Friday, October 17, 2014.

Following a time and energy consuming renegotiation process that spans for about two years, the Government of Indonesia and PT Vale signed an amendment to the Contract of Work (CoW) entailed the result of the renegotiation as mandated by the Act of 2009 on Mineral and Coal. The signing was conducted at the Ministry of Energy and Mineral Resources (EMR) office, Jakarta, on Friday (October 17, 2014).

The government of Indonesia was represented by the Indonesian Coordinating Minister for Economic Affairs and Acting Minister of Energy and Mineral Resources (ESDM), Chairul Tanjung, while PT Vale was represented by the Company's President and CEO, Nico Kanter and Chief Financial Officer, Febriany Eddy. Deputy Minister of Energy and Mineral Resources, Susilo Siswoutomo, Director General of Mineral and Coal R. Sukhyar and Executive Director of Vale's Base Metals, Peter Poppinga witnessed the signing.

"Vale believes that with this amendment, the company is well positioned to contribute to the development of Indonesia and continue to create shareholder value. I'd like to extend our appreciation to the government of Indonesia for its valuable support and trust," said Nico Kanter.

The CoW amendment includes the following:

  • Reduction of the Contract of Work area from 190,510 hectares to 118,435 hectares. At the end of the Contract of Work dated December 28, 2025, the Company can maintain 25,000 acres of ore zones as proposed to be exploited by the Company. In addition to the ore zones, the Company can maintain required area for operations and other purposes. The renegotiation results on mining area reflected an adequate land size for teh company's investment and long-term growth plans.
  • Agreement on royalty of 2% of sales (to 3% when the price of nickel rose) in accordance with the royalty structure set out in government regulations and reflect the evolution of the market dynamics.
  • Obligation to PT Vale to divest 20% of its stake to Indonesian public. This is in line with the provisions of the Government of Indonesia for integrated mining and processing companies who must divest 40% of its shares to Indonesian participants and at the same time admitted 20% of PT Vale's stake own by public shareholders acquired through the Indonesia Stock Exchange. The divestment process will be carried out within a period of 5 years.
  • PT Vale will be allowed to propose an extension of 2 x 10-year operating license, and subject to regulatory approval. The Government approval will be based on the fulfillment of the obligations by the Company as set forth in the amendment to the Contract of Work.

PT Vale's Contract of Work amendment is sealed